Co-operative society deposit interest and Provident Fund-linked amounts were treated as ineligible for deduction under the income-tax provision.

Interest earned by a co-operative society on bank, post office and fixed deposits not linked to its primary business is treated as income from other sources and is not deductible under the claimed co-operative society relief. The text also states that amounts relating to Provident Fund contributions do not qualify for deduction under the same provision. On that reasoning, both claims were rejected and the stated ratio favours the Revenue.

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Issues: (i) Whether interest earned from bank, post office and fixed deposits other than co-operative societies was deductible under Section 80P(2)(d) of the Income-tax Act, 1961. (ii) Whether the amount relating to Provident Fund contributions was eligible for deduction under Section 80P of the Income-tax Act, 1961.

Issue (i): Whether interest earned from bank, post office and fixed deposits other than co-operative societies was deductible under Section 80P(2)(d) of the Income-tax Act, 1961.

Analysis: The governing principle applied was that interest earned on deposits made by a co-operative society in banks, post office or similar investments is not derived from the society's primary business activity and is not covered by the claimed deduction where the deposit activity is not part of the object of the society. Such interest is treated as taxable income under the head corresponding to income from other sources.

Conclusion: The issue was decided against the assessee and in favour of the Revenue.

Issue (ii): Whether the amount relating to Provident Fund contributions was eligible for deduction under Section 80P of the Income-tax Act, 1961.

Analysis: The same controlling reasoning was applied to the second question, and the addition relating to the Provident Fund amount was held not to qualify for deduction under Section 80P.

Conclusion: The issue was decided against the assessee and in favour of the Revenue.

Final Conclusion: The appeal succeeded and the substantial questions of law were answered in favour of the Revenue.

Ratio Decidendi: Interest earned by a co-operative society from bank, post office or fixed deposit investments not forming part of its primary business is taxable as income from other sources and is not eligible for deduction under Section 80P.

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